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19 Interest Rate Risk (LO3) ee bonds with 5.00% coupon rates, all making annual coupon payments and all selling at face value. The shor y of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 3 pe the price of the 4-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Rounc decimal places.) be the price of the 8-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Rounc e decimal places.) be the price of the 30-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Roun 2 decimal places.) LI be the price of the 4-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round

19 Interest Rate Risk (LO3) ee bonds with 5.00% coupon rates, all making annual coupon payments and all selling at face value. The shor y of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 3 pe the price of the 4-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Rounc decimal places.) be the price of the 8-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Rounc e decimal places.) be the price of the 30-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Roun 2 decimal places.) LI be the price of the 4-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You skipped this question in the previous attempt. Problem 6-19 Interest Rate Risk (LO3) Consider three bonds with 5.00% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the price of the 8-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What will be the price of the 30-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round answer to 2 decimal places.) d. What will be the price of the 4-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) e. What will be the price of the 8-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. What will be the price of the 30-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) g. Comparing your answers to parts (a), (b), and (c), are long-term bonds more or less affected tha short-term bonds by a rise in interest rates? your nces h. Comparing your answers to parts (d), (e), and (f), are long-term bonds more or less affected than short-term bonds by a decline in interest rates? a. Bond price b. Bond price С. Bond price d. Bond price D. Bond price < Prev 6 of 10 Next > Mc Graw Hill
Transcribed Image Text:You skipped this question in the previous attempt. Problem 6-19 Interest Rate Risk (LO3) Consider three bonds with 5.00% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the price of the 8-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What will be the price of the 30-year bond if its yield increases to 6.00%? (Do not round intermediate calculations. Round answer to 2 decimal places.) d. What will be the price of the 4-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) e. What will be the price of the 8-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. What will be the price of the 30-year bond if its yield decreases to 4.00%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) g. Comparing your answers to parts (a), (b), and (c), are long-term bonds more or less affected tha short-term bonds by a rise in interest rates? your nces h. Comparing your answers to parts (d), (e), and (f), are long-term bonds more or less affected than short-term bonds by a decline in interest rates? a. Bond price b. Bond price С. Bond price d. Bond price D. Bond price < Prev 6 of 10 Next > Mc Graw Hill
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